Indian businesses in China on Friday welcomed the reform of China's currency exchange regime as a step in the right direction but said the move may result in greater forex risks and adversely hit Chinese exports.
"I see the yuan revaluation to 8.11 to a US dollar with a trading band of three per cent as perhaps the beginning of the process," L&T president-operations, R N Mukhija said.
"This is too little compared to us and the rest of the world already prepared for," Mukhija, who is involved in L&T's plans to make China as a major manufacturing base, said.
"We at FICCI think that is a step in the right direction and we hope that Yuan would start reflecting its real value in the coming weeks," Director, Federation of Indian Chambers of Commerce and Industry, China, Atul Dalakoti said.
"The present revaluation of about two per cent is a small one and there seem to be a lot of upside for the Yuan to move. It would certainly put some pressure on the exports out of China," Dalakoti, also President of August (Tianjin) International Trade Co Ltd, said.
"There will no longer be currency stability and businesses in China have to carefully hedge forex risks," President of Liaoning Birla Carbon Co. Ltd., T K Chatterjee said.
"Exports would be adversely affected due to the devaluation. As with entry into WTO, for China, this is the start of exchange rate reform process. However, proper mechanisms are required for smoother integration into world forex markets," Chatterjee, who is heading the Birla group's foray into China, said.
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